M/S Jayaswal Neco Industries LTD. vs. Commissioner Of Commercial Tax

Facts

The Chhattisgarh Commercial Tax Tribunal referred three questions of law to the High Court. The appellant, M/s Jayaswal Neco Industries Ltd., was granted exemption from tax liability on inter-State sales under a notification dated 3-6-1993, effective from 22-9-1996, for an investment in an Integrated Steel Plant. An amendment to Section 8(5) of the Central Sales Tax (CST) Act, effective from 10-5-2002, made the production of C-Form mandatory for availing exemption. The Tribunal maintained an assessment and appeal order despite the appellant arguing that the issue was covered by decisions of the Bombay High Court and this Court, and that the Tribunal failed to consider the amended Section 8(5) in light of these decisions. The dispute concerns the retrospective application of the amendment requiring C-Forms for exemption.

Held

The Court held that the questions of law referred by the Chhattisgarh Commercial Tax Tribunal are covered by the decision of this Court in Jayaswal Neco Industries Ltd. (supra), which relied on the Supreme Court's decision in Prism Cement Limited's case. The amendment to Section 8(5) of the CST Act, making the production of C-Form mandatory for exemption, is prospective in nature and applies only to transactions where Eligibility Certificates were issued after 11.05.2002. Accrued rights to absolute exemption, granted prior to the amendment and without the condition of submitting C-Forms, are not affected. The notification dated 31-10-2006, which incorporated the amended provisions, would not apply to the petitioner as they had already been granted exemption with effect from 22-9-1996. Consequently, the assessment order dated 18-6-2010 and the Tribunal's order dated 26-11-2016 were quashed. The petitioner Company is entitled to the benefit of exemption without the submission of C-Form. The Court expressly left undecided any issues not covered by the referred questions.

Key Issues

1. Whether the Ld. Tribunal erred in maintaining the assessment and appeal order in spite of the fact that the Hon’ble Bombay High Court has decided the issue on the powers under Section 8(1) and 8(2) of the State Act. (Question of law) 2. Whether the finding of the Ld. Tribunal is perverse as it failed to consider the relevant decisions relied upon by the applicant/assessee which dealt with identical issue and deliberated and interpreted the amendment brought in Section – 8(5) elaborately. (Question of mixed law and fact) 3. Whether the Ld. Tribunal failed to read the amended provision of Section – 8(5) of the Central Sales Tax Act correctly, specifically in the light of the decision of the Hon’ble High Court of Bombay in the case of M/s Prism Cement Limited Vs. State of Maharashtra. (Question of law) Contentions: Appellant: The questions of law are covered by this Court's decision in Jayaswal Neco Industries Ltd. v. State of Chhattisgarh and Ors. and the Bombay High Court's decision in M/s Prism Cement Limited Vs. State of Maharashtra, which held that amendments to Section 8(5) of the CST Act are prospective and do not affect accrued rights to absolute exemption granted prior to the amendment. The Tribunal erred by not considering these precedents. Respondent: The State counsel supported the appellant's submission, agreeing that the issue has already been answered by this Court in Jayaswal Neco Industries Ltd. (supra).